The full story...

Solar same price as grid electricity

MARK COLVIN: Solar power from Australian rooftops has become so cheap and efficient that photovoltaic cells now produce electricity for the same price that's charged by the electricity grid.

Australia is one of the first countries in the world to reach what's known as "grid parity".

And in a time of rising electricity prices, what that means is that even without solar subsidies it makes good economic sense to install solar panels.

Matt Peacock reports.

MATT PEACOCK: Across the country, governments of all persuasions are abandoning schemes to pay people for the power their rooftop solar cells generate, just as quickly as they introduced them.

The so-called feed in tariffs, whether gross or net, have been unfairly blamed for Australia's rapidly rising electricity costs.

But what's been missed in all of this controversy is that the rooftop solar photovoltaic, or PV panels, are now generating electricity for the same price and sometimes cheaper, than you can buy it from the grid.

In effect, this makes solar competitive with coal, even without subsidies according to the Photovoltaic Association's Muriel Watt.

MURIEL WATT: It's competitive with coal if you add what you need to do to bring the coal fired electricity to where you want to use it. So it's coal plus the network.

MATT PEACOCK: So for a consumer, does that mean race out and buy your solar panels, even if you did miss out on the subsidy, because in 25 years time it'll be justified?

MURIEL WATT: Absolutely. I think so. I think it's a really good investment and that's just looking at it from the price of electricity now. If you assume, as I think most people would, that electricity prices are not actually going to stay where they are now, they're going to keep going up, then it's an even better investment for you.

MATT PEACOCK: How did we end up here? I mean why has it suddenly become competitive?

MURIEL WATT: Well the world market's been growing very strongly; Australia's played a little bit of a part in that. Markets have been growing at 50 per cent a year and so on for the last decade or so and the learning curve for solar PV has been about a 20 per cent drop in cost of production for a redoubling of capacity produced.

So with that kind of growth rate we've seen rapid reductions in costs of production and now that's being reflected in prices as well, as we've seen a whole lot of new production come on stream.

Australia also has the high dollar, so that's made prices in Australia even cheaper than they are in other places and our electricity prices have gone up significantly in the last five years.

MATT PEACOCK: Australian sunlight, too, is stronger than it is, say, in Germany, making PV panels here more effective.

Grid parity, says Muriel watt, is solar's coming of age and governments now need to rethink their whole power-pricing model.

MURIEL WATT: It's been the holy grail of the industry to reach it and now of course we're faced with an electricity system which isn't designed to have generation at the distribution side of the meter, cheaper than you can buy it from a central generated source brought to you via transmission and distribution and a retail system.

So we need to be able to think about what whole electricity regulatory system needs to look like to accommodate much higher levels of individually generated power as that becomes cheaper for people to do than buying from the grid.

MATT PEACOCK: Home generated power, believes Muriel Watt, should be worth a higher, competitive price, given that it's already on the doorstep and doesn't require the huge cost of poles and power lines.